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A Very Modern Revolution

There are two types of change: managed change and chaotic change.

Enormous changes are happening in our society right now. Businesses as well as governments have a crucial role in shaping those changes. Both businesses and government look to technology for solutions and to the internet's potential to access an enormous amount of information and deliver it to all, anywhere in the world.

No organisation -- large or small, public or private -- can afford to ignore the impact that new technologies are having on our lives. The people will not allow it. Leaders in every sector must fundamentally alter the way their organisations do "business" in this new environment, and managing this change successfully is a key component of success. The e-revolution is being driven by the ordinary demands of ordinary people, as well as the policy-makers and wealth-creators, as much as by business competitiveness.

While they have different underlying objectives, many of the issues they face are remarkably similar. Businesses have the chance to make radical cuts in their own operating costs, to reach out to existing markets in new ways and to gain access to new markets. Governments have the opportunity to develop better services more efficiently for citizens.

In addition, business and government are facing real challenges in changing the culture within their organisations through e-business transformation. E-business typically needs to be driven from the top, and it is often a painful process and one that leads to major transformation throughout the entire organisation. However, there is often resistance to the radical developments in working practices and culture that inevitably follow.

Some e-business enthusiasts tend to overstate the relevance of the e-business model to government. However, while the profit motive is of course absent, the concept of "best value" is not, and as government repositions itself as more citizen-centric, the similarities are increasing. The Prime Minister at the launch of UK online succinctly made the point that "There is no 'new economy'. There is one economy, all of it being transformed by information technology."

So what are the drivers for change in business and government, and how are the transformations in organisational culture and working practices being addressed?

Modernising Government: the new revolutionaries

The Prime Minister has put Modernising Government at the heart of his agenda -- transforming public services to meet the needs of the consumer by exploiting the full benefits that information technology can bring. There are a number of issues driving the e-government strategy.

Electronic enablement of business and government is rightly central to the government's vision for building a modern economy. The fact is that the internet is the fastest growing market place in the world economy, with predictions that the value of e-commerce may rise to [pound]800 bn, or even higher, by 2003. The UK still needs to catch up with its rivals in the e-revolution. To enable it to do so, the government must continue to ensure that the nation reaps the benefits of these major technological advances.

This means that the government itself has an important role to play by setting an example in its own use of technology as the head of a major supply chain, and by developing a genuine two-way flow of communication with suppliers and citizens. The government also has a responsibility to increase value for money for taxpayers by making the most of e-business efficiency -- driving down costs through streamlining internal processes and through the more effective delivery of public services by electronic means.

By connecting businesses, resulting in efficient procurement and cost savings, imagine the amount of money government could save in reduced costs for goods and services through strategic vendor sourcing, c-procurement, online exchanges and auctions. Self-service efficiencies for suppliers would further drive down excess costs.

The main driver for e-government should be a complete transformation in the way services are delivered to citizens. Providing greater integration and access to information and services is a significant, but incredibly worthwhile, challenge. This is a key issue, especially for local government, but also for some central departments, such as the DSS, the Inland Revenue and the DTI.

Since the mid-1990s, government and public services have been moving gradually towards the first stage of the revolution -- the provision of information online. By providing greater access to information, on demand, 24 hours a day, the internet has the potential to help citizens through the complexities of government, offering the promise of greater clarity and openness.

Thus far, much of the e-government programme has been about putting in place the means for citizens to access information electronically. The COI and CCTA sites offer a concise way to access up-to-the-minute information across a range of departments, local authorities, task forces and agencies. The government portal and the proliferation of call-centre projects in local government are a reflection of this trend.

Government is learning from business how to organise itself around the needs of its users -- responding to customers when and how they want. The emphasis on the delivery of information, rather than interactivity, is not wrong, but it is worth sounding a note of caution. Looking at many of the targets in the e-government programme, it can seem as if electronic service delivery is an end in its own right, rather than the means of delivering benefits to consumers. It should be recognised that providing citizens with multichannel access to government information will not, of itself, come close to delivering the complete e-government vision. The real benefits will emerge only when electronic access to information is matched by fully integrated delivery matched to the needs of citizens.

One major barrier to e-government has been the lack of confidence by citizens and suppliers who need to be assured of the same "look and feel" when interacting with a wide range of central and local government departments. While there are some good examples of government websites, there is a lack of common standards or coherent and consistent user interfaces. The challenge is to inspire suppliers to become forward-looking and citizens to have confidence in dealing with the government. To do this, common standards need to be a priority.

If the machinery of government is to be transformed in a way that works for citizens, for business, for the civil service and for government departments, information must be managed as a strategic asset across organisational boundaries as never before.

Modernising the Economy: the business imperative

Last October, the e-commerce minister, Patricia Hewitt, revealed that 1.7 million small to medium-sized enterprises (SMEs) are now online, exceeding the government's own target of 1.5 million by 2002. The minister's assessment was upbeat. "This year's report shows business across the UK has embraced information and communication technologies (ICTs) and is seizing the opportunities e-commerce presents."

UK online for business is a partnership between government, industry -- including Oracle -- and many other organisations seeking to galvanise SMEs to embrace e-commerce. Jenny Searle, its director, believes that "it is vital for UK SMEs to harness the opportunities that ICT offers to improve their competitiveness".

The UK's economy relies heavily on SMEs, who in the past have not had access to the same resources or expertise as larger corporations. New ways of introducing information service provision are, however, creating a more level playing field. The government and industry need to promote e-commerce and overcome inertia and lack of understanding of the opportunities and challenges presented. SMEs need to understand that e-commerce can create a common environment for the business supply chain and the delivery of lower costs -- and that these cost savings can then be passed on to the consumer. E-commerce transactions have the potential to grow tenfold over the next three years, reaching around 4 per cent of GDP by 2002.

It is clear that many of the business drivers for SMEs are also close to the government's own objectives. For example, improving customer satisfaction by offering an outstanding service. SMEs are enabling their customers to easily interact with them 24x7x365 using self-service applications over the web. Businesses are now offering personalised products and services each time customers visit the site. All systems can be integrated to enable organisations to provide timely, accurate information to respond quickly to customers' needs and queries.

Businesses have long recognised that to succeed they must know who the customers are, what they want, and how to respond to and anticipate their needs. Ensuring their products and services are fully integrated to deliver them faster and cheaper, and by improving customer service and increasing customer satisfaction, businesses are able to attract and retain customers as never before.

Not only are companies driving down operating costs, but they are actually improving the quality of products and services through better customer intelligence and accessing a global range of suppliers. The supply chain, internal operations and customer-facing systems are now electronically connected, enabling SMEs and large business to assess opportunities better, understand business risks and manage them collaboratively.

Businesses are saving money and improving their competitiveness by providing self-service applications for customers, employees and business partners. Systems are being integrated, processes streamlined, and everyone is sharing the same information. And, because the value chain is completely connected (demand side, supply side and inside), the quality of services is being driven up.

If much of this sounds familiar to decision-makers in government -- so it should. Policy-makers are also keen to improve the quality in their policy-making through improved intelligence by interacting more effectively with other government departments and citizens. These business drivers are leading the e-government revolution in much the same direction as e-business.

It is communicating the value of such a transformation, while simultaneously understanding and responding to the reservations of SMEs, that will deliver the vision of the new economy. After all, the economy depends on the success of the UK's SMEs who are presently slow to grasp the opportunities of business change. That is why we must celebrate our successes and share good practice by forward-looking companies. GroupTrade (see case study below) is a great example of how e-solutions enable new purchasing models that have the potential radically to transform the market place.

The Road to Revolution

Not only are the drivers for e-transformation remarkably similar between business and government -- so are many of the challenges along the way. Not least, the cultural changes that sweep through an organisation when undergoing e-transformation.

Oracle itself has been through the huge learning curve of becoming an e-business. As a company that bet its own business on the internet five years ago, we underwent a huge programme of change throughout the organisation. Dismantling fiefdoms and overcoming resistance is always a challenge. But it proved to be an incredibly worthwhile one. The transformation led to more than $1bn worth of savings in operating costs through consolidation of data and widespread deployment of self-service applications to improve the efficiency of transactions with customers, suppliers and employees. While we are a large business, many of the business change issues we faced were the same as those confronting both central and local government and SMEs.

In view of the public sector's track record in implementing business change and IT programmes, Modernising Government must be viewed as an undertaking where the risks are as least as high as the potential benefits. The history of failed public sector IT projects shows quite clearly that integration is one of the greatest areas of risk. If the IT aspects of the Modernising Government programme were to be handled as a conventional procurement, it would probably fail. A new model is needed to drive down the overall level of risk in the programme and to free up government personnel to focus on those aspects which they are best placed to manage -- the cultural, organisational and process change consequences of e-government.

Government could do well to learn from the more progressive private sector organisations. Faced with the challenge of how to maintain a competitive edge, they are reassessing what constitutes their core competency from which they can build a leading position. All else is being out-sourced, including information service provision. This is not out-sourcing in the traditional sense. A more complete application service provision model is now emerging, where the ASP contractor hosts data and new, integrated, internet-based applications in a data centre. All that customers need to access their applications and data is a simple web browser. This reduces implementation costs, and integration risks, and implementation timescales are measured in weeks and months, rather than years.

This model has clear relevance to government, particularly local government, which is faced with many of the same issues as SMEs. Local government could take advantage of this new ASP model to enable them to focus on their core business of delivering effective public services and managing information services, rather than employing staff to manage the procurement and operation of IT systems. Under this model, legacy IT systems are progressively replaced by fully integrated, web-enabled services covering the common core set of e-government requirements -- from citizenship relation management to electronic procurement. In short, information services can now be provided and financed as a fully integrated utility rather than being procured as an IT system.

There are policy issues that need to be resolved in government. Under the ASP model, both business logic and business data are hosted on the suppliers' premises. This raises issues about data ownership and management, data protection and information security. Further, procurement policy changes are also needed to accommodate the transformed customer-supplier relationship intrinsic to the model.

Nevertheless, world-class e-businesses in the private sector are adopting this IS service provision model. If e-government is to deliver against its promises, ASP is likely to be one of the keys to the solution.

Delivering the Vision

The advent of the internet will have a profound impact on the way government develops policies and delivers services, and business creates shareholder value. The imperative is to understand better how these developments can be harnessed to propel the UK to the forefront of the global information economy Clearly, more effective strategic relationships with major players on the global e-business stage will become increasingly important.

The following case studies -- one from an SME and the other from local government -- clearly demonstrate that effective strategic partnerships can enable radical transformation in forward-looking organisations, be they public or private sector.

Hertfordshire -- the e-County Council

Hertfordshire County Council is an excellent example of how an organisation can harness new technology to restructure itself radically and dramatically improve the service it offers. The council is in the process of reorganising its social services and education departments into a new children, schools and families department in order to provide a single, multidisciplinary team approach to the provision of care services. The new organisation is due to become operational on 1st April 2001.

In order to support the new structure, the council recognised that it must simultaneously develop a central information system that cut across the present "stovepipes" of information within those departments. The council also recognised the need to provide the mechanisms through which information can be shared with relevant third-party organisations, such as healthcare bodies and the police.

Following a competitive tendering process, the council has selected Oracle as its chosen partner for the provision of this new system.

The solution is based upon Oracle's Customer Relationship Management applications, which will enable a single holistic view of a client, the services provided, communication and interaction with the council. The council requires a single case file, which will also enable the effective management of processes around service requests, assessment and delivery. The comprehensive set of information about an individual will facilitate an integrated approach to service provision and ensure that anyone working with an individual has the information he or she requires to make decisions about care and educational needs.

It is intended that the whole range of professionals and other staff working with a pupil/client/patient will use the same personal "file", and that this file will provide the comprehensive record of that individual's personal details, including family and other contacts, history of services, achievements and contacts with the department. This will assist workers and managers in achieving tasks, managing workload and delivering an integrated service to clients/pupils/patients.

The first phase of the system was implemented in April 2000, with further functionality being roiled out to 3,000 users over the next year.

GroupTrade -- Transforming SMEs

If indirect goods and services were bought online, it is estimated that British businesses could save up to [pound]24bn. GroupTrade is a business-to-business (B2B) e-procurement venture which has promised to do just that. The company sells office furniture, stationery and IT equipment, with plans to add insurance, telecoms, car leasing and travel. "Group Trade enables businesses to buy from suppliers as a single powerful trading unit. Oracle technology is at the core of everything we do," says Dominic Owens, the marketing director of GroupTrade.

GroupTrade has an innovative e-commerce model, an excellent management team and first-class financial backing. Owens says: "Small businesses have always paid over the odds for office supplies. Group Trade uses collective buying power to cut operating costs which will immediately drop through to the bottom line."

By using the internet, GroupTrade secures lower prices, pre-negotiated by in-house purchasing experts and backed by online independent advice. The savings on overheads for "grouptrading" companies are impressive. For example, an SME with 20-49 employees might save [pound]50,000 per annum, rising to more than [pound]600,000 for 200-249 employees. Around a third is in cash, with the remainder from reduced research and purchasing time.

"Oracle technology enables us to concentrate on making the website work rather than worrying that it won't. Our service offers a competitive advantage to millions of businesses that don't have specialist buyers and waste time searching for the best deals.

"Group Trade offers a 'one-stop-shop' service, giving buyers one place to go while suppliers gain the advantage of a large single market place. When there are several buyers from the same company, full electronic records help answer 'who bought what and when' queries.

"Oracle technology is therefore providing an end-to-end solution for Group Trade, doing everything from registration through to payment processing, financials and the balance sheet. Thanks to Oracle, GroupTrade can concentrate on making its business work hard to realise the savings on indirect costs for its customers."

COPYRIGHT 2001 New Statesman, Ltd.
COPYRIGHT 2001 Gale Group